“This was no easy decision, but it is a necessary one,” Volvo Aero president Staffan Zackrisson said of the cuts at its main production site in the southern Swedish town of Trollhäten.

“Our volumes are decreasing, both in production and product development, while at the same time we need to manage our cost situation,” he said.

But the news was better for 335 workers at Volvo’s truck division who can now keep their jobs after a deal with the IF Metall union that will see working hours at a plant cut by 10 percent and salaries by four percent instead.

Volvo struck a similar deal in May that allowed the company to cancel a further 600 layoffs.

The Swedish company, which makes trucks, buses and construction equipment, issued a notice to just over 1,500 employees on April 22, saying they would lose their jobs owing to the collapse in global demand for its products.

The Gothenburg-based company posted a net loss of 4.23 billion kronor ($514 million) for the three months ended March 31, down from a profit of 4.20 billion kronor a year earlier.